Dealmaking in the exchange sector continues to gather pace. Switzerland’s SIX Group and the Pan-European stock market operator Euronext battle to acquire Madrid-based Bolsas y Mercados Españoles (BME), one of Europe’s last substantial independent exchanges. SIX on Monday (Nov.18) made an all-cash offer for 100% of the share capital of BME for €34 per share, implying a total equity value of €2.8 billion ($3.13 billion).
The offer represents a hefty premium of 47.6% over BME’s 6-month volume weighted average share price and 33.9% over its closing price of €25.40 on Friday (Nov. 15). The Zurich-based Group said its proposal would create the third-largest European operator of financial market infrastructure.
Commenting on the offer, Romeo Lacher, chairman of the SIX board, stated: “A combination with BME will bring direct and immediate benefits to the stakeholders of both our institutions, at a time when consolidation in global financial markets infrastructure is accelerating. This is in line with SIX’s growth strategy and our commitment to serve customers with highly reliable infrastructure services and seamless access to capital markets.”
The offer was announced minutes after Euronext said it is in talks with the Spanish group's board.
“Euronext notes recent press speculation regarding a potential offer from Euronext for BME,” Euronext said in a statement. “Euronext confirms that it is now in talks with the board of directors of BME, which may or may not lead to an offer being made.”
(Graph Data Source: Refinitiv)
Euronext, which has a market cap of around 5 billion euros, has expanded its footprint in Europe through various acquisitions. Earlier this year, it acquired the Norwegian stock exchange Oslo Børs for around €625 million, after defeating Nasdaq in a bidding war. Euronext now operates exchanges in Amsterdam, Brussels, Lisbon, London, Paris, Dublin and Oslo with Madrid an obvious gap.
In response to SIX Group’s offer, Luis María Cazorla Prieto, general secretary and secretary to the board at BME, stated: “The board of directors has qualified the offer and the transaction as amicable, provided that the board reserves its final opinion until the time it becomes aware of all its terms and conditions, and in particular until the time in which it can value to its full extent the consequences that the industrial plan proposed by SIX would have for the integrity and stability of the Spanish markets and infrastructures managed by BME.”
BME also said that the €2.8 billion bid “may reasonably reflect the current value” of the businesses managed by the stock exchange.
The SIX acquisition could be an attempt to regain access to EU capital markets after Brussels blocked EU-based investors from trading on Swiss exchanges from July this year. The block was put in place over a stalled bilateral treaty. However, SIX CEO Jos Dijsselhof told Bloomberg on a call that the bid was unrelated to the EU dispute.
BME shares soared almost 40% after SIX Group announced the offer. Credit Suisse and Alantra Partners are advising SIX while BME is being advised by Morgan Stanley. The Spanish government is expected to have the final say on any takeover.